Recognition of Marital Discrimination could save you from Foreclosure in Hawaii

Norwest Mortgage, Inc. and Wells Fargo Home Mortgage, Inc. v. Vincent, Perfect Title Company and Jon and Mary Does 1-20, Doe Partnerships, Corporations and Other Entities 1-20

Case No. 25613

This case is an appeal from the Order of the lower court granting a decree of foreclosure against all parties and in favor of the Plaintiff, Norwest.

The factual backdrop of the case is Defendant Allen and Martha are married to each other. They both have a residential property registered under their names in Kamuela, Hawaii. They both applied to refinance their residential mortgage loan with Prudential Home. Prudential informed the spouses that it can only extend credit in favor of Allen and not his wife because of her past bad credit history when she failed to pay her debts. Prudential made it a condition that any grant of credit shall only be possible if she be taken out of the title over said property. Allen agreed to the terms and conditions and the credit was granted in his favor.

Prudential Home later on assigned the note and the mortgage to Norwest. Allen defaulted in his payments. Thus a foreclosure complaint was filed against Allen but the wife, Martha was not made a co-defendant. The lower court issued a decree of foreclosure in favor of Norwest and ordered the property sold at a public auction.

On appeal, Allen raised two issues: a) there was marital discrimination because Prudential and therefore Norwest had asked that his wife be removed as property owner so that it (Prudential) can release the credit; and b) there was violation of the ECOA or the Equal Credit Opportunity Act in that it is unlawful for a creditor to discriminate against any applicant with respect of any credit transaction.

The appellate court ruled that Allen is not the proper party to interpose or use the defense of marital discrimination. It should be the wife considering that she is the party affected and with the duty to prove her injury because of the alleged discrimination. Moreover, the period within which to bring such action has already prescribed and lapsed. On the second issue, the court explained that under the ECOA, Norwest cannot be considered a creditor within its terms. It was not the party with which Allen had a credit transaction. Allen did not deal with Norwest but Prudential. Thus, Norwest cannot be held liable for the acts of another entity. In fact, it did not have constructive notice of what had occurred. The appellate court affirmed the decision of the lower court.

This case was ruled in favor of the plaintiff. At LoanModificationStudio.com, we also bring forth cases in which the banks win so that you may learn from previous defenses.

Lesson Learned:

The spouses failed to take note of the prescriptive period in filing the action for marital discrimination. The wife should have duly raised the issue and filed the action so that the court can take cognizance of the cause of action or complaint. Moreover, the defendant also failed to logically analyze the issue of discrimination by a creditor. He should have known that whatever acts committed by Prudential cannot affect Norwest negatively because it was not privy to their transaction before. The defendant definitely cannot prove the connection between the supposed injury with Norwest since Norwest at that time was not even in the scene with defendant and Prudential.

"Failure is instructive. The person who really thinks learns quite as much from his failures as from his successes."
- John Dewey

Written by Kevin Levonas and Giselle G.